Amazon Product Failure Part 8

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Bernie is an Amazon Seller and public speaker who runs a software company and engineer. With a background in operating systems and devices he shares his Amazon Product Failure with us. Plugable – 120 product company started in 2009 and bet on Amazon from the start.

  • Bernie was at Microsoft 20 years ago and got interested in Bluetooth
  • Go for products that aren’t sexy but functional
  • Bernie went for a bluetooth mouse

What convinced you this was a winner?

  • The bluetooth mouse space is extremely competitive
  • Large established brands and endless number of Chinese suppliers
  • Bluetooth is low energy technology, and depending on the chipset you use it can run for months on two AAA batteries
  • A lot of devices had got a lot more complicated with Lithium Ion batteries and more components
  • So Bernie went back to basics on his product and went price-competitive with the price
  • Chinese brands had poor product instructions, photos and marketing
  • Before 2014 you could just launch Bluetooth products and there were no payments needed to the Bluetooth standards body
  • After Jan 2014 there was a  $4-8k licence fee required – this affected the price
  • In Jan 2014 – Bernie went and registered as many bluetooth products as he could before the deadline came in
  • The trouble was that you had to lock-in to certain aspects of the  design
  • The mouse he’d planned didn’t launch until 2016 (Bluetooth SIG filing 2 years earlier)

Why did it take so long?

  • Took a long time as had 2-3 products launched a month
  • It was a prioritisation call and took 2 years

Where did it go wrong?

  • Launched the mouse and it looked like a rocket ship and took off
  • Sales went up
  • Reviews were coming in and were really good
  • The run rate to stay at the top of the category is huge – 4-6k units per month to be in the top 3
  • Large order compared to normal MoQs for Bernie
  • He did a 3k new purchase order when the first 5* organic reviews came in off his first batch
  • Forced to make risky bets to keep the run-rate going
  • Then another 3k PO and then another to bet on success
  • And this was a new vendor for Bernie too
  • Lots of risk contributed to this Amazon Product Failure: new vendor, competitive category and aggressive POs

Vendor Quality in Amazon Product Failure

  • The vendor was not a good vendor in terms of attention to detail
  • Bernie had worked with them early on to optimise the power management on the mouse

Factory – Nightmare 1

  • The factory put 3 x separate POs together into a single production run of 9,000 units, this compounded risk
  • Leadtimes in electronics are brutal – need to be fast to market
  • Have to rely on sea shipments as margins are tight and needed to keep the cost down
  • Feels like you’re steering an oil tanker at high speed – no ability to make turns and correct course along the way!
  • The factory got confused about firmware versions – they put a different version on this 2nd batch
  • They did poor testing in the factory which contributed to this Amazon product failure
  • Bernie did not do a factory inspection (though not sure it would have helped here)
  • The ‘different’ firmware that they had installed introduced a subtle ‘sleep’ problem
  • These sleep/wake problems can be very difficult to figure out
  • It took about a month or two to realise there was a firmware problem
  • Once the new batch of mice starting hitting the warehouse customers started reporting the mouse did not wake their computers back up

Sleepy Mice

  • There are subtle USB and Bluetooth power management issues that can affect the PC waking
  • The issue here was that customers were moving their mouse to ‘wake’ the PC but it wasn’t working
  • This was being caused by the mouse’s firmware not waking the mouse which in turn then didn’t wake the PC via Bluetooth
  • Firmware is very difficult to work with – no way to easily tell which version of firmware the mouse was running

Fixing the issue

  • The Factory needed to send a special Bluetooth dongle to Bernie to be able to ‘update’ the firmware on a mouse
  • They sent two of what looked to be ‘hand-made’ dongles and only one of them worked
  • It took 5 minutes per mouse to update the firmware over this special dongle which was way too long to be viable!

How long did it take?

  • Amazon product failure Electronic waste – do we ship them back to China? – You can’t ship stuff back to China regulatory-wise they’ve pretty much made it one-way, you need to send it to Hong Kong and sneak it across the border…
  • It didn’t make sense to do this for a cheap product with little margin in it
  • It was too expensive in labour costs to update the firmware on the US stock
  • The only option left was to junk the 8,000 units that were left in stock
  • The cost of this Amazon product failure was $30-40k in monetary terms
  • And a few thousand dollars in just time alone
  • There was no money made back on the stock as it was low-margin anyway

5 Lessons Learned

  • Competitive threat – that our own factories start competing against us – Chinese coming onto Amazon selling directly
    • There is no easy answer but you can react to this by being even more aggressive about identifying new and better suppliers with the best product in a certain space
    • This helps combat this problem because Factories are tied to their own product and can’t easily change.
    • We are not ‘tied’ to any particular supplier and therefore can go for the best supplier for the best opportunity
    • Start small with a new supplier and understand their quality because if they are not self-motivated about their quality then it’s an immediate red flag
  • Inspections and testing – repeated inspection with a factory may have diminishing value
    • If a factory has something to hide – they will hide it!
    • Inspections are good for meta-information about the factory, not necessarily your particular batch
    • Quality is like squeezing playdoh – you try to get your hands around it and you end up finding problems in new and interesting ways
    • Approach and attitude tells you everything about how the factory takes quality

Three Main Metrics for choosing a new Product

  • Bernie is focussed on USB and Bluetooth
  • Look deep down the technology pipeline and the standards bodies
  • Aim for products without competition and with evidence of good run-rates
  • Bernie is using Efficient Era tool to pull in data like return rates, sales rates, when reviews come in, etc.
  • Use research tools – JungleScout etc for run-rate data for keywords and categories
  • Even though Amazon is extremely crowded now it’s still possible to succeed with a great product at a great price and a great Amazon strategy
  • We only prioritise products where we can fire on all those cylinders therefore enhancing success

Bernie’s Software – Efficient Era

  • Created a lot of software to help them be successful on Amazon
  • Mostly around automated customer feedback
  • We send an email out whenever we get a review and match it to orders in Amazon so that you can reach out to that customer when you need to

Contact Bernie